It sounds like a very cool contest, but be sure to read the FAQ section, which has this bit here:

Q: Can I sell, publish or develop my film or story after submitting to the challenge?

A: Yes. It's yours and you own own it, so exploit away! However, please remember by taking part you grant us an in-perpetuity, world-wide, royalty free, non-exclusive licence to promote, publish, sample and sub-licence the work. We will never charge any money for the story or film, but we will offer it free to anyone who wants to show it. The intellectual property in the work is yours and we do not make any claim on this, so we wont take the world or characters you develop without permission.

Not sure if it's their intent, but it looks to me like they would have the right to use it, whether it is a winner or not?

Rule 8: SFL Participant hereby acknowledges that SFL will be an owner of his/her completed entry; and that SFL has the right to publish, show, exhibit, broadcast, record or disseminate in any way possible, including and not limited to publication, broadcast television, cable television, radio and/or the internet; and the right to publicise the SFL and Challenge using the name or passages of and from the “Story.”

I have emailed the organisers to ask for clarification before the competition. On the face of things I have to agree with Rebecca's interpretation.